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A Better Partnership
August 03, 2015

COA: A person appointed to a receivership cannot be held personally liable for attorney fees

In Howard & Howard Attorneys v. Jabbour, No. 320291, the Court of Appeals held that a person appointed to a receivership cannot be held personally liable for attorney fees, reasoning that an agent who contracts with a third party on behalf of a disclosed principal is generally not liable to the third party in the absence of the agent’s express agreement to be held liable. In addition, the order of appointment explicitly and unambiguously stated that all legal services were being performed pursuant to defendant’s appointment by the trial court as receiver.
 
Defendant was appointed by the trial court to a receivership to oversee certain businesses involved in an underlying lawsuit; as part of his receivership, he retained plaintiff to perform legal services in connection with the receivership. The receivership appointment order specified that the receivership estate was to pay the receiver’s fees and expenses, including plaintiff’s compensation. However, the parties to the underlying lawsuit settled and, despite being ordered to do so, never paid the entirety of plaintiff’s fees. Defendant agreed that plaintiff was entitled to be paid, but did not agree that he owed the sum to the plaintiff.
 
Plaintiff commenced suit against defendant personally. The trial court deemed the plaintiff’s suit impermissible and granted summary disposition in favor of defendant and denied summary disposition to plaintiff. The Court of Appeals affirmed.  The Court reasoned that an agent who contracts with a third party on behalf of a disclosed principal is generally not liable to the third party in the absence of the agent’s express agreement to be held liable.  Here, the order of appointment explicitly and unambiguously stated that all legal services were being performed pursuant to defendant’s appointment by the trial court as receiver.

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